Del. Eric Nelson, R-Kanawha, speaks on the House floor Wednesday about a bill that would transfer $29 million out of the state’s rainy-day fund to the Public Employees Insurance Agency.
CHARLESTON — Some lawmakers want to pay the $29 million cost of keeping public employees’ health insurance plans the same next year by taking money out of the state’s rainy-day fund.
The House Finance Committee passed a bill Wednesday morning to pull the money from the reserve fund, instead of finding room for it in next year’s budget.
The money would be put into a special Public Employees Insurance Agency account and would not be subject to the state’s 80-20 match rule, meaning premiums won’t rise, according to PEIA Director Ted Cheatham.
“This will not be corrected overnight, but I believe with this move, (it) gives some assurance to the board and to state employees that we can come to a fix,” said Committee Chairman Eric Nelson, R-Kanawha, as he addressed the full House of Delegates later Wednesday afternoon.
The transfer would be a one-time occurrence, meaning PEIA’s base funding would stay at the level it currently is, and the Legislature would need to come up with a larger pot of money during its next session to keep up with rising medical costs.
The money could be used to keep the PEIA plan the same in July as it is now.
The plan to freeze the plan has gained wide support among Republican leaders after teachers threatened to go on strike because of rising premiums and low pay, among other things.
“A freeze is not a fix, and it’s not rocket science what we need,” said Del. Isaac Sponaugle, D-Pendleton. “We need $50-60 million of new revenue a year to keep PEIA fully funded, and until this body gets serious about finding a revenue stream, or if you’re going to make massive cuts, that’s the only way to fix it.”
No change to the PEIA plan will occur until the agency’s finance board meets next week. Even then, the proposal they will vote on — to freeze the plan — will be contingent upon getting $29 million from the state. If the committee’s bill doesn’t get enough support, or if lawmakers can’t find that much money in the budget to spare, the board will likely have to change the plan again.
It’s unclear if Gov. Jim Justice supports using money from the Rainy Day Fund to pay for the freeze. A spokesman for his office, Butch Antolini, did not respond to a request for comment.
Gov. Jim Justice said in a press conference last week that $6.5 million of what’s needed to freeze the plan is already factored into his budget, so lawmakers would only need to come up with $22.5 million more.
By the end of January, the Rainy Day Fund had $714 million, according to the state’s budget office. Nelson said that transferring $29 million out of it would keep the fund 15 percent above the state’s budget proposal for the next fiscal, a figure used by rating agencies to determine the state’s credit rating.
When asked in an interview why the bill called for the full amount to come from the Rainy Day Fund instead of just the $22.5 million, Nelson said, “I think it’s just the clarification. Everybody’s talked $29 million, and just no question. And the other thing, any surplus at the end of the year, half of it goes to Rain Day anyway.”
Nelson said it was an unusual step to pull money out of the reserve fund, but it was needed to show teachers that lawmakers are serious about fixing the plan.
“While I would prefer that the money come from another source ... I realize the need to do this and to do it quickly,” said Del. Brent Boggs, D-Braxton. “I also want to say, while this is needed to freeze the premiums and comply with what the governor has asked the PEIA board to do, it in no way fixes PEIA.”
House Education Chairman Paul Espinosa, R-Jefferson, said a task force will be convened to come up with a fix to PEIA’s problems.
Jake Jarvis can be reached by phone at 304-935-0144, on Twitter at @NewsroomJake or by email at jjarvis@statejournal.com.
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